INTERVIEW: HDNET'S MARK CUBAN

June 4, 2002

DALLAS, TX - HDNet co-founder Mark Cuban is a pioneer in high definition broadcasting. His 1080i-based network has already made a name for itself when it comes to sports programming, having produced Major League Baseball and NBA games, the 2002 Winter Olympics and horseracing's Triple Crown. "HDNet World Report" is helping to broaden the network's range of programming, bringing back dramatic imagery from the war in the Middle East.

Post had a chance to speak with Mark Cuban as his own Dallas Mavericks were winding down an NBA season that included a playoff run. Here's what he had to say...

Post: What are HDNet's plans for commercial content and support?

Cuban: You've got to put it in perspective. We are not an analog broadcast network competing with CBS. This is more analogous to cable in 1980, where you didn't see HBO doing original programming. ESPN didn't have any of the major professional sports leagues. There was more of a macro upswing just in the value proposition of cable television. The channels that had carriage grew with the industry. You didn't see HBO trying to program against anybody. It was just, "Let's get whatever content we could." And with ESPN and the others, it was the same way. We're in the exact same boat right now. We have one particular mission.

If you think of the buying process for someone for high definition television, it's pretty much: go into the store, see HDNet up and running on a TV at your consumer electronics store, retailer or whatever; say, "Oh my goodness. That's amazing!" And then your buying scenario is : "I want that same thing at home." HDNet's job is to provide that same thing.

Post: Do you have to have a business model similar to a traditional broadcaster?

Cuban: Well, yes and no. The business model is similar, but the question is what type of programming? CBS, NBC, ABCâ€¦ they all have there thing that they try to communicate as a brand. Right now, our brand message is "Wow TV." It's like being there. You want that unique experience that comes from filling an early adopter need. And so our audience will grow as high definition grows.

We're in a growth industry. We're not analogous to traditional networks. Remember the days when people use to chase cable trucks down the street? It wasn't about, "Hey, I want to see this show." It was "57 channels and nothing on." It wasn't because there was dramatically differentiated programming, it was just that there was more of it.

This is analogous. The differentiation in this case isn't volume or quantity, the differentiation is eye candy. Because the price points of high def TVs are falling like a rock, the market is going to grow.

Post: I've seen projection TVs for as little as $1,600.

Cuban: Yeah, it's incredible. And those prices are falling even further, and they'll keep on going down. It's just like the PC price/ performance curve. And as those price points continue to fall, the market size grows.

Post: HDNet has adopted 1080i?

Cuban: It's 1080i only. No upconverts. We'll convert from 35mm and we'll do original high def, and that's it. You are not going to see something done on tape and converted. Going back to my point as a brand, what we sell is eye candy.

Post: What are you planning as far as non-sports programming?

Cuban: The same. It's native HD. Unless it's converted from 35mm. If it's something that was originally done in 35mm, we can go through a conversion. If it's 16mm, we can't.

Post: So you're not looking to pick up classic features and upconvert them?

Cuban: No, we will not upconvert anything. I buy a company called Rysher Entertainment and one of the shows that I own is "Lifestyles of the Rich and Famous." Cool content, but it was done on tape. That's completely worthless to me from a high-def perspective.

Post: What is it used for?

Cuban: Nothing (laughs).

Post: Are you aware of what's going on in here in New York and how Cablevision has access to Madison Square Garden â€“ the Knicks, the Rangers - and still it seems slow to get HD going?

Cuban: They have a legacy business where they make their money, where they have to make their investments. Whereas I don't have an old business to protect.

Post: That answers the question as to how you've done it so quickly?

Cuban: A typical production environment already has a ton of money already invested in Beta, Digital Beta and everything else, where I don't have any of that investment to protect. I'm starting from scratch. And for me to go out and buy digital editing equipment - Final Cut Pro or whatever - it may be cheaper actually than a lot of the traditional stuff. But if you already own it, it's like if you already own a car, you're not going to buy a new one just because it gets a little more miles to the gallon.

Part two is, if you are one of these big major integrated media companies, you don't want high def to come too soon, because you don't want to write down the value of a big chunk of your library.

If you're a big syndicator and all of those game shows were done on tape? Bzzzz.

Post: What are you doing with your original content? Mavericks games? Archives?

Cuban: We keep it on HDCam and we keep it on D-VHS format.

Post: What are your production capabilities?

Cuban: We have two trucks that we own. We built them and we own them. They were specially built. All of the equipment was specially designed. We've got our own server system. We've got integrated backup to D-VHS and HDCam. We've got duplicated systems internally so we won't have a break down.

The good news about it all is that we can make our mistakes while no one is watching. Because while the audience size is small, that's where you want to learn and experiment.

Post: What made you go with 1080i and were you sold on a particular manufacturer?

Cuban: There were a couple of reasons. We like Sony stuff. We like HDCam and they have integrated solutions. The 1080i we picked for a couple of reasons: one, it's the native format of almost all televisions. We don't want to worry about how a TV does conversions to 720p. 480 we just didn't consider because it doesn't look good on big screens. And we didn't want you to go over your buddy's house with the big-screen TV and flip through the channels and we looked worse than everybody else.

720 is still good, but 480? You just weren't getting the benefits. 720 is OK, but you have to deal with conversion inside the TV and that's a risk. And the third reason, which is the most compelling as to why we went with 1080 is just that it's a bigger number. When John and Sally Public go walk into a store and see a TV that is 1080, and ask, "Who broadcasts in 1080?" I want to say that HDNet broadcasts in 1080 and â€˜So and So Network' does it in 720 or 480. Which do you think is better?

Post: I understand that you played a part in getting the sets out to the local [Dallas] community to help get things started?

Cuban: We went to commercial establishments and sold them at cost - 61-inch RCA TVs with the DirecTV receiver built in - so that they would be in sports bars and so when we did a Mavs game in HD, they would be able to get it.

Post: Are you doing all of the Mavericks home games?

Cuban: We didn't do all of them, we just did a sampling and next year we'll do a few more.

Post: So the trucks are available for other uses?

Cuban: Everything, from concerts to any type of event.

Post: I hear that you've got a deal in the works with the Arena Football League?

Cuban: Yes, we should have that together in the next couple of weeks.

Post: And there's a lot of opportunity in Texas alone - the Texas Motor Speedwayâ€¦

Cuban: Oh, there is tons of stuff! There is no shortage of content. There is absolutely no shortage of content whatsoever. All of this nonsense you hear about there being a shortage of content? That is such B.S.! The thing you have to realize is that there is not a separate window for high definition television. So if you own a show - I own "Nash Bridges," and "Nash Bridges" is licensed to USA Network. I can't license that separately to myself for high def because it's licensed. I can work a deal with USA if they have an interest in doing it in HD. And we can talk about converting it and all that kind of stuff. I can't say I'm not putting it out there for whatever reason. I'm not putting it out there because it's already licensed! So when you see a Disney saying there's a shortage of content, that's nonsense. The content is already licensed.

Post: What do you think about the primetime shows that are being shot in HD?

Cuban: It's smart, because you can get dailies immediately. You can see exactly what it's going to look like on the monitor and you can adjust in realtime.

Post: Would you pick up a show like that?

Cuban: Oh yeah, we've talked to people. From a cost perspective it just doesn't make sense right now. There's no reason for me to try to be the fifth or sixth or seventh network, and compete to pay a million dollars a show. Four years from now? Five years from now? Sure, but it doesn't make sense today.

Post: Didn't you air a Shirley Temple movie in HD?

Cuban: Yeah, we took an old, 35mm public domain film and wanted to see what it would look like and how people responded to it. It was for test purposes. We're not showing it anymore.

Post: What are your future plans?

Cuban: Now that we're out there and Discovery is right there with us, you're going to see it coming a lot faster. We're going to be opportunistic and bring it as we can. We've have Peter Arnett ["HDNet World Report"], who we are sending around the world to hot spots. We'll do more of that type of programming.

The whole key is do demonstrate the differences that high def offers - with sports, the 16:9 aspect ratio, with news, seeing a war zone in high def is a whole lot different than seeing it in standard definition.